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HUD Recommending Sanctions Against Bank 'Robo' Notaries

The U.S. Department of Housing and Urban Development (HUD) is considering sanctions against Notary employees of at least one of the five banks involved in the $25 billion National Mortgage Settlement and may recommend sanctions against Notaries of the other four banks.

HUD’s Office of Inspector General issued reports last week detailing the “robo-signing” practices of the five mortgage lenders that agreed to the Settlement. One report specifically recommended that HUD’s Enforcement Center “pursue appropriate administrative sanctions against Notaries who may have violated state Notary requirements.”

Those sanctions could include fines and a temporary or permanent ban on working on HUD programs. The report also noted that HUD officials had “referred the apparent Notary violations” to the appropriate Secretary of State’s office.

All five reports concluded that the banks implemented policies and document processing procedures that required their employees to notarize large numbers of foreclosure documents outside the presence of the signers. Among the specific practices noted:

One bank set a target of notarizing 70 to 80 documents per hour and evaluated employees based on their ability to meet document-processing quotas.

Managers at another bank would bring stacks of pre-signed documents to Notary employees and wait while they were notarized.

Notary employees at another bank permitted co-workers to use their stamps.

Notaries failed to maintain records of their notarizations in statesthat have journal requirements.

Employees at two banks were rebuffed by upper management when they raised questions about the notarization and document processing practices.

The HUD reports clearly indicate that senior management had a responsibility to implement policies that safeguarded the integrity of the notarial act. The reports also point to a general lack of training for bank employees.